A Big Mac costs $3 in the United States and 50 pesos in Mexico. The purchasing power parity theory would predict that the exchange rate in the long run is
A. $1 = 6 pesos.
B. 1 peso = $1.50.
C. $1 = 16.67 pesos.
D. $1 = 0.06 pesos.
Answer: C
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Coffee and sugar are complements. If a poor sugar harvest leads to an increase in the price of sugar, there will also be
A) an increase in the price of coffee. B) a decrease in the price of coffee. C) a rightward shift in the demand curve for coffee. D) a leftward shift of the supply curve of coffee.
Who receives the most of what is produced in a market economy?
A) everyone receives an equal amount B) people who earn the highest incomes C) lawmakers and other politically favored groups D) those who are willing and able to buy them
If this is a closed economy, how many bikes will be produced? 
A. 50,000 thousand B. 100,000 thousand C. 80,000 thousand D. 20,000 thousand
A newspaper story on the effect of higher milk prices on the market for ice cream contained the following:
"As a result [of the increase in milk prices], retail prices for ice cream are up 4 percent from last year. . . . And ice cream consumption is down 3 percent." Source: John Curran, "Ice Cream, They Scream: Milk Fat Costs Drive Up Ice Cream Prices," Associated Press, July 23, 2001. Based on the information given, what is the price elasticity of demand for ice cream? A) 0.75 (in absolute value) B) 1.33 (in absolute value) C) 12% D) We do not have enough information to calculate the elasticity.